In Order to Calculate the Third Year's Depreciation on an Asset

question 58

Multiple Choice

In order to calculate the third year's depreciation on an asset using the sum-of- the-years'-digits method,which of the following must be known about the asset?

• A) Its acquisition cost
• B) Its estimated salvage value
• C) Its estimated useful life
• D) All of these must be known.

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Definitions:

Entrepreneurial Judgment

Entrepreneurial judgment is the decision-making skill entrepreneurs exhibit in identifying, evaluating, and capitalizing on opportunities to create value.

Business Decisions

Choices made by businesses that affect its operations, strategy, and financial performance.

Competitive Price Takers

Firms in a competitive market that accept the prevailing market price and have no power to influence it.

Economic Profits

The excess of a firm's total revenues over its total costs, including both explicit and implicit costs.